- Where Insurance & Technology Meet

Ontario Brokers, Carrier CEOs Stake Out Telematics Ground

On the way into the Insurance Broker Association of Ontario (IBAO) CEO panel session on Thursday last, a colleague of mine suggested a new drinking game: take a shot every time someone says “Telematics.” Had we done that, and shared our quota with the 500 or so in in the audience, we would all have been blind drunk before any of the hospitality rooms opened.

The result of the panel was agreement that Telematics use is one of the most important issues facing carriers and brokers in Canada.  In addition, while everyone welcomes the leadership IBAO is giving with its IBRI initiative, there is no consensus yet on an operational approach for the independent broker community.

We’d like to know where you think this is going next.

There are great reasons for Telematics in Ontario now

Evan Solomon, CBC broadcaster, moderated the panel of five CEOs.  He began the discussion on Telematics by asking “Where is Telematics going?” Jean-Francois Blais, president of Intact Insurance responded first with what seemed to be the consensus of the group: Telematics offerings were based on “sound principles.”   Blais was certain that most auto insurers would have some type of offering in the future.  Blais indicated that Intact would be rolling out its offering over the next year, beginning in Quebec in December.

Maurice Tulloch, who recently left his role as ceo of Aviva Canada to assume the ceo role at Aviva U.K. & Ireland General Insurance, noted that Telematics based insurance has the capacity of “changing the conversation” with the consumer and can open up a different relationship with a younger demographic.  Alister Campbell, ceo of The Guarantee,  noted that Telematics had the potential to be “completely transformational.”

Campbell indicated that in his experience with the use of Telematics in trucking, there was a 30% reduction in the loss ratio.  Tulloch noted that use of Telematics to provide feedback to drivers through cell phones in the UK market, resulted in a 15% lowering of claims frequency.

There will be challenges that can be met

While the CEOs concurred that Telematics has its limitations and pitfalls, there are no show stoppers yet.  Karen Gavan, CEO of Economical, responded to a question about data privacy, noting that exchanging personal information for better value is new fact of life.  Many consumers “are used to being tracked,”  she said.

A serious concern by several CEOs was the possibility of over regulation.  Brigid Murphy ceo of The Dominion said that if the use of Telematics looked like it was being used to exclude some driver segments, it could be seen as a variant on ‘redlining’, and invite regulation which would slow down the process.  Murphy noted that the IBAO leadership with governmental relationship would be valuable in this.

Economical’s Gavin said that if the insurance community were over-regulated, it would stifle needed innovation.  Gavin said, “If we don’t do this (Telematics), someone else will.”  She cited Google, cell phone carriers as possibilities.

And, in conclusion…

Solomon took show of hands on the importance of various topics in the panel, including Ontario automobile insurance, water damage, climate change.  When it came to Telematics, a large enough portion of the audience raised its hands that Solomon noted, “Telematics seems to be the top concern.”

In thanking the panel, Rick Orr, IBAO chairman, was direct in his request that the ceos commit to supporting the IBRI initiative as the Telematics solution for independent brokers.  Referring to another broker initiative to replace company-unique portals with a common solution for entering new business, Orr said, “Multiple Telematics solutions are worse than multiple portals for brokers.”

The ceos had all indicated in the discussion that the IBRI solution was under consideration, but none had made a commitment.  Polite silence was the collective response to Orr’s suggestion.

 What do you think?

So, the ceos are on record that Telematics has the potential for benefits to the industry.  The audience agrees.  The brokers have put forward an operational recommendation.

We’d like to know from you what you think.  Will the industry move forward?  If so, will it be collectively or behind a small group of leaders?  Will IBRI get the traction it requires?

Put your thinking into gear, and let us know.



One Comment

Harrison Michael

The companies will never commit to IBRI. There is too much at stake – distribution costs (in other words COMMISSIONS). In order to regain it’s lost #2 ranking a direct writer in the US is adding homeowners discounts to clients who use telematics program for their autos. A disturbing situation for brokers. A recent US survey determined that some insurers using both direct and broker distribution channels used focused advertising to increase their direct writings which increased significantly while increased policy count through brokers was disappointing. The conclusion was it was more cost effective to heavily advertise than use the broker channel.

IBRI is a defensive tactic by IBAO. This is not a good strategy. Brokers need to take a serious look at the delivery system and make significant changes to the cost structure that recognizes a reduction in commission. Personal lines auto and property insurance (with exceptions for very high value automobiles and upscale homes) are becoming a commodity which implies distribution at significantly reduced costs (telematics and UBI). It is understandable that brokers are worried and want to protect the equity in their brokerage. I maintain brokers can increase the value of their brokerage and continue to be profitable if they actively demonstrate to companies how they can participate in increasing their auto policy count. To do this they will have to accept two conditions mentioned above -1) a reduction in commission and 2) a very efficient operation in the personal lines area with integration of company software.

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